Sponsor

Sponsor

Unemployment dips in sign of improved job market

WASHINGTON (AP) - The number of people seeking unemployment
benefits dipped last week, a sign the job market may be improving
slowly.

The Labor Department says that applications for unemployment
benefits edged down 1,000 to a seasonally adjusted 400,000. That's
the lowest level in four months. The previous week's figure was
revised upward from 398,000 to 401,000.

The four-week average, a less volatile figure, dropped for the
fifth straight week to 407,750. That suggests there is a downward
trend in applications.

Applications have been at or above 400,000 for 17 weeks. They
fell in February to 375,000, a level that signals healthy job
growth. They stayed below 400,000 for two months, but applications
then surged to an eight-month high of 478,000 in April and have
declined slowly since then.

The report comes a day before the government will release the
July employment figures. Economists forecast that Friday's report
will show that employers added a net total of 90,000 jobs. The
unemployment rate is expected to remain unchanged at 9.2 percent.

That would be an improvement from June, when the economy added
just 18,000 - the fewest in nine months. But at least three times
that many new jobs would be needed to substantially reduce the
unemployment rate.

Employers are pulling back as the economy struggles.
The economy grew at an annual rate of only 1.3 percent in the
April-June period after barely expanded in the first three months
of this year. Growth was less than 1 percent in the first half of
the year, the weakest stretch since the recession ended.

Manufacturers expanded at their slowest pace in two years in
July, a private trade group said Monday. The Institute for Supply
Management also said that expansion among retailers, restaurants,
financial services and service industries slowed to a 17-month low
in July.

The two reports showed that there is little sign the economy is
growing any faster in the July-September quarter than in the first
half of this year.

A more cautious consumer is a key reason for the sluggish
period. Americans cut their spending for the first time in 20
months in June, the government said Tuesday. For the entire
April-June period, consumer spending rose only 0.1 percent, the
worst showing since the recession ended.

Much of the slowdown stems from a spike in gas prices since last
year. That has limited what consumers can spend on discretionary
goods, such as furniture, electronics, and appliances. Spending on
those categories has fallen for three straight months.

Manufacturing output has also been hit by supply disruptions
that resulted from Japan's March 11 earthquake. Those disruptions
caused auto companies in the U.S. to reduce production.

Economists had predicted the economy would turn around in the
second half of the year once those temporary factors began to fade.

But many are now more pessimistic about the second half of this
year. Goldman Sachs recently cut its estimate for growth in the
July-September period to 2.5 percent from 3.25 percent. JPMorgan,
meanwhile, has reduced its estimate to 1.5 percent, from as high as
3 percent several weeks ago.

Growth of about 2.5 percent is barely enough to reduce the
unemployment rate. The economy would need to grow 5 percent for a
whole year to bring down the rate by one percentage point.